Global markets experienced another down day as woes over the euro zone crisis multiply. Today, we’ll look into a possible downgrade of Spanish banks, BRIC bear markets, and Colombian political violence.

Indian budget legislation expected to be voted on soon by Parliament will likely be quite negative for the country, despite analysis which suggests emerging markets are on the verge of a strong period of leadership relative to developed economies.

Many have heard of the BRICs (Brazil, Russia, India, China, and now featuring more South Africa), but how do you trade these BRIC countries? Not everyone has the luxury to dig down and research 10-20 companies to find 1-2 solid companies to trade or invest in.

The factors that unite the “BRIC” markets are somewhat artificial, but given the role each of the four constituents plays, the grouping still holds up well.

Membership in the club is a big deal. Simply being in the BRIC — Brazil, Russia, India and China — opens up a stock to the roughly $21 billion in fund money out there allocated to chase opportunities in these four countries.

However, some are questioning whether the club still makes sense in a post-recession world. Strategists from firms like UBS have come up with pretty compelling answers.

Size and momentum

India and China are theoretically industrial development stories that are generating massive economic activity as they modernize their huge rural territories. Both have also evolved formidable export industries and both are relatively resource-poor compared to their aggregate pent-up demand.

In theory, demand for commodities from India and China is then the driver of economic activity for big commodity producers like Russia and Brazil.

Because Asia’s billions are pulling oil out of Russia and iron ore out of Brazil, these relatively “developed” markets get to enjoy something of the growth footprint of their fast-expanding trading partners.

Brazil is still urbanizing its own relatively vast rural regions, so in that sense it seems to fit better in with India and China. But Russia, which already built its highways, power plants and telecom networks, seems a more tenuous addition to the mix.

Is Russia a development story? Not really. But is Russia growing at a fast rate? Yes.

In fact, over the last decade, the Russian economy expanded at an annualized rate of 5% — nowhere near China and India’s 7% to 10%, but definitely ahead of Brazil’s 3.1%. When you just look at the consumer economy, Russian domestic spending surged 8.7% a year, which is impressive enough in any context.

So Russia is growing fast enough to be interesting to investors, and few would argue that its vast energy and mining industries are not worth taking seriously on a global scale.

Correlation

The question then becomes whether Russia trades more like a developed market — in which case maybe it should join the EAFE — or with its counterparts in the emerging world. In other words, does an allocation to Russia provide any greater low-beta diversification than a U.S.-centric portfolio?

UBS argues that Russian stocks decoupled from the rest of the BRIC during the credit crisis, not so much because its exports crashed (they actually held up fairly well) but because its banks were heavily exposed to the crunch.

The country was simply overleveraged — and in that respect, resembled Western Europe and North American markets.

Having fallen so far, Russian banks have cleaned up their balance sheets and now have plenty of money to lend to foreign borrowers.

This is fantastic for Russia bulls because it puts the country’s traditionally cash-starved financial system more on a level with China’s or India’s more centrally controlled credit markets.

What it means

Despite talk about adding Indonesia (for BRIIC) or writing off the big four entirely to focus on “CIVETs” (Colombia, Indonesia, Vietnam, Egypt and Turkey), the BRIC seems to be here to stay.

The big BRIC ETFs, of course, still weigh each of the big four very differently. Russian stocks go from 23% of the heavily concentrated BIK (quote) to just 3% of Brazil-driven EEB (quote), with BKF (quote) in the middle with a 12% allocation.

On a company-by-company level, Gazprom (OGZPY, quote) is the clear winner, with 9% of BIK and 3.4% of BKF.